Monday, January 10, 2011

Agency Consolidation

Last month, the Government Modernization Committee conducted an interim study to analyze the possible benefits of consolidating some of Oklahoma’s central service agencies. Central service agencies are the state agencies which provide services to other Oklahoma state agencies.

The Office of State Finance (OSF) accommodates the needs of agencies through the provisioning of shared financial, information technology and human resource services, including the hosting, development and support of the state’s enterprise software systems.

The Employees Benefits Council (EBC) manages Oklahoma’s state employee benefits on behalf of state agencies.

The Merit Protection Commission assists agencies and state employees with human resource issues.

The Oklahoma State Employee Education and Group Insurance Board (OSEEGIB) manages the state’s self-funded preferred provider organization insurance plan on behalf of state, education and local government employees.

The Archives and Records Commission and the Department of Libraries are responsible for the proper disposition of state agency records.

Consolidating some or all of these agencies would present state policy leaders with the opportunity to realize greater efficiency and cost savings through the streamlining of services.

Currently, state employees must access multiple bureaucracies in order to take advantage of a state shared service. For instance, when a state purchasing officer wishes to order a technology item, he/she must receive approval or assistance from both the Office of State Finance and the Department of Central Services. A consolidated central services agency would mean that procurement officers would only be required to deal with one other bureaucracy.

In some cases, it may be hard for a state agency director to decide which shared service to use. For instance, the Office of Personnel Management and the Office of State Finance provide almost identical shared financial services -- and agencies are then forced to choose which agency to use. This is not an easy task because there does not appear to be a set of performance metrics by which state agencies can gauge which of the central services agencies provides the most efficient shared service.

Clearly there is room for improvement when state employees are required to deal with multiple state bureaucracies in order to accomplish a single necessary task. We should all be able to agree that it is not a best governance practice for Oklahoma’s central service agencies to provide duplicative services to state agencies. Certainly this level of red tape slows down the ability of the state employee to quickly provide services to Oklahoma taxpayers.

A major benefit from consolidating shared services agencies would be the huge savings from the reduction of overhead and administrative costs. Our study detailed a possible savings of $10 M per year if the consolidation resulted in a reduction of just 20% of appropriated dollars.

It is my belief that this proposed plan for consolidation will receive serious consideration from the Oklahoma Legislature during the upcoming legislative session.